Gibellini (Vanadium)

    Related Documents

    pdf Gibellini Project Presentation
    pdf Feasibility Study August 31, 2011 by AMEC

    Gibellini Project Summary

    In June, 2017, Prophecy acquired through lease, the Gibellini vanadium project in Nevada, USA (the “Gibellini Project”) with the intent to carry-out mining and processing operations there.

    In June, 2017 Prophecy entered into an agreement with the intent to lease the Gibellini vanadium project in Nevada, USA (the “Gibellini Project”) for which the Company aims to carry-out mining and processing operations there. Execution of a lease agreement is contingent upon successful completion of due diligence by the Company.

    The lease is for a term of 10 years, which can be extended for an additional 10 years at Prophecy’s option.

    Based on the Company’s research, Gibellini which will be an open pit, heap leach project has the potential to become the first primary vanadium mine in the United States.

    The Gibellini Project is located in Eureka County, Nevada, about 25 miles south of the town of Eureka.

    The property is situated on the east flank of the Fish Creek Range in the Fish Creek Mining District, and is easily accessed by a graded gravel road extending south from US Highway 50.

    The project is comprised of 40 unpatented lode claims totaling approximately 826 gross acres in the state of Nevada, which is ranked among the world’s top 10 mining jurisdictions according to the Fraser Institute. Opportunities also exist to further expand the project beyond its current definition.

    AMEC E&C Services, Inc. (“AMEC E&C”) prepared the Gibellini Project resource estimate and feasibility study titled “American Vanadium, Gibellini Vanadium Project” having an effective date of August 31, 2011 for American Vanadium Corp. (“AVC”) following the guidelines of the CIM Definition Standards for Mineral Resources and Mineral Reserves. The report which was prepared according to the disclosure requirements of National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) outlined 7.9 million tons at a weighted average grade of 0.32% vanadium pentoxide (V2O5) in the measured category and 15.16 million tons at a weighted average grade of 0.28% V2O5 in the indicated category making for a total resource of 23.05 million tons at a weighted average grade of 0.29% V2O5.* Total metal content of the measured and indicated category resources is 131.37 million pounds V2O5. The inferred category resource is 14.23 million tons at a weighted average grade of 0.17% V2O5. The total metal content of the inferred category resource is 49.42 million pounds V2O5 (more resource details in table below).

    Gibellini Hill Mineral Resource Estimate
    Resource
    Category
    Domain (1) Cut-off V2O5
    (%)
    Tons (2)
    (M)
    Grade (3)
    (%V2O5)
    Metal Content
    (M lbs V2O5)
    Measured Oxide 0.08 3.95 0.25 19.83
    Transition 0.07 3.95 0.38 29.88
    Indicated Oxide 0.08 8.01 0.22 35.05
    Transition 0.07 7.15 0.33 46.62
    Total Measured and Indicated various 23.05 0.29 131.37
    Inferred Oxide 0.08 0.16 0.20 0.98
    Transition 0.07 0.01 0.22 0.07
    Reduced 0.09 14.05 0.17 48.37
    Total Inferred various 14.23 0.17 49.42


    Notes:

    1. (1) Mineral resources are reported by mineralization domain. Domains are laterally continuous portions of the ore body having a grade determined by oxidation state that is relatively consistent and distinct from adjacent domains.
    2. (2) Specific gravity measurements used are specific to the domain. Mineral resources are reported within a conceptual Lerchs-Grossman pit shell using a long-term V2O5 price of US$12.59/lb, estimated mining and processing costs, and processing recoveries that are based on the oxidation state of the deposit.
    3. (3) No capping of assays but three composites were capped at 1.5%. Dilution is not included.
    4. (4) Other notes: Categories are referred to as classes in the AMEC E&C resource estimate and feasibility study. Rounding of numbers required by reporting guidelines may result in summation differences. Abbreviations: M=million, lbs=pounds

    Based on the feasibility study base case, the Company projects mine production to average 11.4 million pounds of vanadium pentoxide per year at 66% recovery.* This could enable the Gibellini Project to potentially supply up to 3% of current global vanadium demand.

    The Company believes the Gibellini Project could potentially become a low-cost primary vanadium producer based on the low strip ratio of 0.22 and a unit operating cost of US$4.10/lb of vanadium product reported in the feasibility study. The study’s base case scenario places the Gibellini Project’s after-tax IRR at 43%, and after-tax NPV at US$170.1M at a 7% discount based on capital cost of US$95.5 million and US$10.95/lb vanadium pentoxide price.

    *The historic Gibellini mineral resource estimate that was prepared by AMEC E&C for AVC has an effective date of July 31, 2011. Results of the study were disclosed previously by AVC in accordance with NI 43-101 and are considered historic in nature by the Company. Mineral resources are reported inclusive of mineral reserves. This historical estimate was prepared using currently accepted methods and assumptions but the costs and prices assumed are not current. It is considered relevant in that the estimate was prepared for the resource area the Company intends to lease and acquire and open pit mining was assumed. It is considered reliable since the geologic model developed by AVC geologists was used. This historical estimate assumed open pit mining, on-site processing by heap leach followed by solvent extraction and precipitation, and all services provided by a contract miner. The key parameters for resource estimation included ten foot composites that honoured the domain, grade was interpolated to a distance of 110 ft from the composites, composite grades greater than 1% V2O5 were capped to 1% V2O5 beyond 110 ft, the domain boundaries and a minimum grade of 0.05% V2O5 were used to limit grade interpolation, and a long-term V2O5 price of US$12.59/lb was used. The key methods used include consideration of lithology, alteration and assay results to establish oxidation domains, capping assays and composites as described previously, variography, ordinary kriging, and validations to assess potential bias. The historical estimate uses the same resource classes described in Section 1.2 of NI 43-101. The historical estimate does not include any more recent data or estimates available to the Company. The work needed to upgrade the historical estimate as current mineral resources is to use current costs and metal prices. A qualified person has not done sufficient work to classify the historical estimate as current mineral resources. The Company is not treating the historical estimate as current mineral resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

    With the onsite production process designed to yield vanadium pentoxide, the project is expected to create opportunities for direct off-take agreements with the steel industry. Furthermore, since the process already yields vanadium in sulfuric acid in an intermediary step to producing vanadium pentoxide, it is expected that this intermediary product can be pulled from the process and used directly as an electrolyte for grid-scale energy storage batteries.

    The Gibellini Project was undergoing the initial stage of the permitting process but was placed on hold by the original owner. Thepermitting process can be resumed in short order and construction is expected to start in 2019 subject to favorable market conditions and completion of project financing.

    By combining the advanced-stage Gibellini Project in Nevada, USA, with the Company’s 100%-owned, Titan titanium-vanadium project in Ontario, Canada, Prophecy is well-positioned with these two quality vanadium projects, to be the leading North American vanadium exploration company. The Company’s objectives for these two projects are to:

    1. Provide exposure and leverage to rising vanadium prices by defining and adding attributable vanadium resources in the ground in politically safe jurisdictions.
    2. Build the first vanadium mine in North America by steadily advancing mine permitting, project financing and construction.

    Louie Hill Project Summary

    The Louie Hill Project lies approximately 500 metres south of the Gibellini project, is easily accessed by a graded gravel road extending south from US Highway 50, and is about 25 miles south of the town of Eureka, Nevada.

    The Louie Hill Project is comprised of ten unpatented lode claims totaling approximately 207 gross acres in the state of Nevada, which is ranked among the world’s top 10 mining jurisdictions according to the Fraser Institute. Opportunities also exist to further expand the project beyond its current definition.

    Union Carbide reportedly drilled a series of 60 holes at the Louie Hill Project in 1956. Noranda Exploration, Inc. completed five reverse circulation holes (total 610 ft) in 1973. During the 2007 to 2010 period, RMP Resources Corporation (predecessor to American Vanadium Corp. or “AVC”) completed a total of 11,010 ft of drilling in 38 drill holes on the Gibellini project and Louie Hill Project. Nine were drilled in the Louie Hill Project.

    The Louie Hill Project is located in the same formation and lithologic units as the Gibellini project. The general geology in this area is considered to be similar to the Gibellini project.

    AMEC E&C Services, Inc. (“AMEC E&C”) prepared the Louie Hill Project resource estimate as part of the feasibility study titled “American Vanadium, Gibellini Vanadium Project” having an effective date of August 31, 2011 for AVC following the guidelines of the CIM Definition Standards for Mineral Resources and Mineral Reserves. The report which was prepared according to the disclosure requirements of National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) outlined a resource of 7.67 million tons at a weighted average grade of 0.27% vanadium pentoxide (V2O5) in the inferred category for Louie Hill. The total metal content of the inferred category resource is 41.87 million pounds V2O5.

    Inferred Louie Hill Mineral Resource Estimate, Effective Date 20 May 2011, Mark Hertel, SME Registered Member:

    Cut-off V2O5 (%) Tons (Mt) V2O5 (%) V2O5 (Mlb)
    0.077 7.67 0.27 41.87

    Notes to accompany Louie Hill Mineral Resource Table:

    1. Mineral Resources are reported above a 0.077% V2O5% cut-off grade
    2. Mineral Resources are reported as undiluted
    3. Mineral Resources are reported within a conceptual pit shell
    4. Rounding as required by reporting guidelines may result in apparent summation differences between tons, grade and contained metal content
    5. Tonnage and grade measurements are in US units. Grades are reported in percentages.

    * The historic Louie Hill mineral resource estimate that was prepared by AMEC E&C for AVC has an effective date of May 20, 2011. Results of the study were disclosed previously by AVC in accordance with NI 43-101 and are considered historic in nature by the Company. This historical estimate was prepared using currently accepted methods and assumptions but the costs and prices assumed are not current. It is considered reliable since the geologic model developed by AVC geologists was used. The historical estimate uses the same resource classes described in Section 1.2 of NI 43-101. The historical estimate does not include any more recent data or estimates available to the Company. The work needed to upgrade the historical estimate as current mineral resources is to use current costs and metal prices. A qualified person has not done sufficient work to classify the historical estimate as current mineral resources. The Company is not treating the historical estimate as current mineral resources. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

    Direct leaching of black shale vanadium materials

    To the Company’s knowledge, the Gibellini project is the only North American black shale vanadium project with a full feasibility study. The Company considers the Louie Hill Project to have similar geology and to be amenable to the same open pit mining and heap leach processing as Gibellini. The Gibellini-Louie Hill district has the potential to become the first primary vanadium mine in the United States.

    Black shale (also called stone coal) is an important vanadium resource in China, which is world’s largest vanadium producer. Black shale is regarded as a low-grade multi-element ore. However, because of its relatively high vanadium grade compared to other metallic and nonmetallic elements found in black shale, research and studies of the recovery of vanadium from black shale have received considerable attention and investment in China since early 2000, based on the Company’s research. This has resulted in several black shale vanadium-producing mines in China utilizing established, low cost, solvent extraction and precipitation methods today.

    The Gibellini project and Louie Hill Project represent a pure-play vanadium opportunity in North America to investors because Gibellini material is low in deleterious metals and non-metals (typically less than 1% Fe, 0.5% Ca, 0.3% Mg, 0.2% Ti) and is thus conducive to well-established solvent extraction and precipitation methods. Since the process already yields vanadium in sulfuric acid in an intermediary step to producing vanadium pentoxide, it is expected that this intermediary product can be pulled from the process stream and used directly as an electrolyte for grid-scale energy storage batteries.

    Qualified Persons

    The technical contents of this news release have been prepared under the supervision of Christopher M. Kravits, CPG, LPG, General Mining Manager of Prophecy. Mr. Kravits is a Qualified Person as defined in NI 43-101. Mr. Kravits is a consultant to the Company and is not independent of the Company since most of his income is derived from the Company.

    Cautionary Note Regarding Forward-Looking Statements

    Certain statements contained on this page, including statements which may contain words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, or similar expressions, and statements related to matters which are not historical facts, are forward-looking information within the meaning of applicable securities laws. Such forward-looking statements, which reflect management’s expectations regarding Prophecy’s future growth, results of operations, performance, business prospects and opportunities, are based on certain factors and assumptions and involve known and unknown risks and uncertainties which may cause the actual results, performance, or achievements to be materially different from future results, performance, or achievements expressed or implied by such forward-looking statements. These estimates and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies, many of which, with respect to future events, are subject to change and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by Prophecy.